Planning on Buying a Boiler on Finance? Let’s Explain the Details steffan@warmzilla.co.uk May 24, 2024

Planning on Buying a Boiler on Finance? Let’s Explain the Details

Planning on Buying a Boiler on Finance Let’s Explain the Details
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    For a family of four, the average monthly living cost in the UK, excluding rent, is roughly £2,268. While the most turbulent financial conditions are behind the UK, recovering as an Average Joe takes time. Considering the financial landscape of the UK, if you need a new boiler, you will most likely want to finance it.

    Before buying a boiler on finance, let’s do a basic cost exercise about buying a boiler.

    Key Takeaways

    • Buying a boiler on finance can be an ideal solution for families as the upfront cost can be prohibitive.
    • There are things you should look out for when applying for boiler finance, such as interest rates, hidden fees, etc.
    • Not everyone qualifies for finance, there are eligibility factors to finance companies will consider.
    • Buying a boiler on finance does allow you to afford higher quality boilers than you could if you paid upfront

    Essential Cost Exercise of Buying a Boiler

    According toCheckatrade, here are some fast facts:

    • A boiler supply and installation ranges from £2,000–£4,000
    • Gas boiler running costs start at around £90 per month
    • Most boilers have a lifespan of about 10-15 years

    Your home’s boiler is a long-term investment, and when reviewing the average cost of supply and installation, the above is a vague generalisation at best.

    Multiple elements will affect the final cost of buying a new boiler. These include the boiler’s type and size, the complexity of the installation, any additional work required, and the cost of the professional services.

    Understanding these factors can help you anticipate the potential variations in cost and make a more informed decision.

    These variables include:

    Cost of Plumber and Registered Safety Engineer

    When installing a new boiler, you’ll want to find out how long the professionals need to install your unit. Most plumbers will quote the work at a flat day rate, and the average is around £300 per day.

    Generally, a simple reinstallation of a like-for-like boiler will take 4-6 hours. But if they need to convert your older, regular boiler to a combi boiler, it can take 1.5 to 2 days.

    And if you need your new boiler to live somewhere else in the home, this will vary widely again, depending on distance.

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    Scope of Work Required

    When a boiler breaks down or becomes outdated and must be replaced with a different, newer version, the scope of work to rectify it can vary widely. Even when your boiler simply needs to be replaced with an identical unit, there are still variations to consider.

    A simple swap between combi boilers will cost between £3,000 to £5,000, and a conversion from a back boiler to a combi will retail for the same price.

    As you can tell, buying and installing a new boiler is expensive and out of the budget for most people in the UK.

    Before deciding on a finance agreement, make sure you understand what it covers. Most will include removing and installing the new unit, but this can vary between deals.

    Once you’ve done this, you’re ready to finance your new boiler. Let’s discuss some red flags to keep an eye out for when looking for financial aid.

    Red Flags to Be Aware of When Getting Finance

    Before signing on the dotted line, make sure that you read through all the terms and conditions. While this is obvious advice, many skim-read through the details.

    Here are the top issues to look out for:

    High Interest Rates

    Usually, a tell-tale sign of signing up for a short-term or payday loan is to be aware of signing agreements with high interest rates. Make sure you’re comfortable with the annual percentage rate (APR).

    No Personalised Options

    When there are no personalised interest rate options, everyone is getting the same rate. Regardless of the other client’s credit scores or financial standing, you are penalised for their potential failure.

    Ultimately, if you don’t get a personalised option, you’ll have to pay more to finance your boiler. Conduct research to ensure you set realistic expectations of what you could be paying for your interest amount.

    Hidden Fees

    As mentioned, always read through the fine print. Make sure to highlight what potentially could be hidden fees and when they could apply.

    These hidden fees can include:

    • Early repayment charges
    • Ongoing servicing fees
    • Extra repayment fees
    • And monthly or annual fees

    Be Wary of Shorter Terms

    Shorter terms means a higher monthly amount. Sometimes lenders can find paying back short-term loans difficult, which means they could end up extending contracts with additional fees.

    Ensure you’re on top of repayments and research upfront before signing on the dotted line.

    Now that we’ve outlined the additional costs involved and the red flags to look out for when agreeing to a financial package, let’s discuss how to buy a boiler on finance.

    How To Buy A Boiler On Finance

    There are legal requirements that must be met in the UK to finance any purchase. When deciding to finance a new boiler, you must meet specific requirements.

    Legal Requirements

    You must be at least 18 years old to apply for any finance in the UK.

    Another legal requirement when applying for finance is that you must have been a UK resident for at least three years and you have to prove you can pay the instalments.

    This evidence can be in the form of:

    • Payslips
    • Proof of a pension
    • Proof of large savings or benefits
    • Valid passport
    • Valid UK/EU driving licence
    • And a utility bill dated within the last three months with the applicant’s name on it.

    A credit check will also be required to see whether there is a history of bad credit or no history at all.

    If you have a bad credit score, it will be harder to apply for finance, but not impossible.
    We’d strongly recommend ensuring that you avoid having bad credit by doing the following.

    Avoiding Bad Credit

    All finance applications are subject to the approval of a credit check.

    But we’d recommend only applying if you have a good credit rating. If your rating is lower than the fair status, you can improve it by doing the following:

    • Ensure you are always registered to vote at your current address on the electoral register
    • Avoid getting any County Court Judgements (CCJs)
    • Pay your bills on time
    • Pay for items on your credit card and settle your credit card payments quickly
    • Don’t borrow more than you can afford to pay back
    • Make sure you’re not linked to anyone else’s credit score
    • Don’t apply to purchase a boiler through multiple lenders at once
    • And avoid super high-interest loans

    These are general tips and not financial advice. WarmZilla does not offer financial advice. You can check your credit score for free on websites like Experian.

    If you cannot purchase a new boiler without financial assistance, you can apply for a government grant that will help.

    Government Grants

    If you were wondering about government grants, there are several schemes to assist you in replacing your boiler.

    Let’s talk about the first scheme that most will be familiar with:

    Affordable Warmth Obligation 2024

    In 2024, a government-led initiative was started to reduce fuel poverty by providing the necessary upgrades to make homes more energy-efficient.

    This scheme involves some of the UK’s largest energy companies. With this initiative, those eligible can apply for a free boiler scheme or boiler upgrade.

    To be eligible, you need to be receiving at least one of the following:

    • Universal Credit
    • Working Tax Credit
    • Jobseeker’s Allowance
    • Child Tax Credit
    • Pension Guarantee Credit.

    Both social and private housing are eligible for this grant. The application process can be tricky, but if you are able, you should verify that you meet the criteria, gather documents that prove your eligibility, and reach out to an energy supplier participating in the scheme.

    After fulfilling the application steps, you should be on your way.

    If there are any issues, the energy supplier will guide you through the application.

    The next initiative forms part of the Energy Company Obligation (ECO) scheme, which is in its fourth year.

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    Energy Company Obligation (ECO) 2024

    ECO4 operates in partnership between the government and the UK’s energy suppliers. Each phase of ECO has introduced more improvements. It is currently set to continue until 2028.

    You can apply for a grant to replace old and inefficient boilers if you are an eligible household.

    Those who are eligible will also be receiving one of the following benefits:

    • Child Benefit
    • Pension Guarantee Credit
    • Income-related Employment and Support Allowance (ESA)
    • Income-based Jobseeker’s Allowance (JSA)
    • Income Support
    • Tax Credits (Child Tax Credits and Working Tax Credits)
    • Universal Credit
    • Housing benefit
    • Pension credit saving credit

    If you do qualify for the ECO benefit, you can talk to your local authorities, who will refer you to obligated energy suppliers so that they can install the new boiler.

    The application process for a boiler using the ECO4 grant will require you to:

    • Confirm you match the criteria for assistance
    • Gather the required documents
    • Contact an approved supplier
    • Get approval and installation from a participating partner in the scheme

    It also communicates directly with the energy suppliers or official ECO4 staff.

    But what if you don’t qualify?

    The LA Flex Scheme

    The LA Flex Scheme focuses on shifting selected households to more energy-efficient boilers. By allowing local authorities to nominate certain homes, the goal is to help specific homeowners move away from fossil fuels.

    Unfortunately, you can only express your interest in receiving help.

    If, however, you are successful, a local energy provider will assess the energy-saving measures that are suitable for you.

    The process will differ depending on the scope of work required and location. However, the general steps for application will require you to contact your local authority for the requirements, as they will differ between regions.

    Here is the last government scheme for those still looking for financial help.

    Boiler Upgrade Scheme (BUS)

    If you’re considering upgrading and replacing your entire heating system with a greener alternative, such as a heat pump or biomass boiler, you can apply for a grant to help with the total cost.

    Think about this financial assistance as your deposit however. Through it you’ll receive grants up to the value of £7,500.

    However, you will not qualify if you have a hybrid system, which combines heat pumps and fossil fuels. BUS is only available for homes and non-domestic buildings in England and Wales with existing fossil fuel heating.

    But if you can apply for finance, the next step is to select the monthly instalment fees you can afford. After all, missing a payment will affect your credit rating.

    Boiler Repayment Timings

    When purchasing a new boiler via finance, you’re effectively spreading the overall cost into manageable instalments.

    You will most likely pay these monthly instalments for 12 to 120 months (1-10 years).

    To take advantage of spreading out the cost, you will need to pay an interest on the overall amount. The Annual Percentage Rate (APR) represents this interest rate over a year and the cost of using a finance service.

    Some options offer 0% APR, but this is only available on certain boilers with an IFC (international finance corporation) tag and will come with specific terms and conditions.

    Usually, the requirement for 0% APR is a large lump sum of cash for the deposit, larger monthly payments, and a contractual period between 12 and 24 months.

    It’s always important to do research about the retail outlet and its financial partners. Ensure they are regulated by the Financial Conduct Authority (F.C.A). Also, retailers like us are credit brokers and will have a profile on the Financial Services Register.

    If you can meet the monthly instalments or have access to a large lump sum of cash, don’t be tempted by a company offering 0% APR without these requirements:

    • A deposit
    • 12 to 24 month repayment period
    • Or credit checks

    If you’re looking to reduce your monthly repayment amount, you will need to extend the payment period, increasing the amount of APR you’ll be paying back.

    Another method is to put down a larger deposit.

    Deposit Amount

    When entering into a finance agreement, you will be given the option to put down a deposit. Depending on the financier, you can choose the deposit size or the overall deposit percentage.

    As you’d expect, there will be minimum and maximum limits depending on who you’re dealing with and what you’re buying.

    A rule of thumb is that the larger the deposit, the smaller the instalments will need to be.

    Now that we know what is involved in buying a boiler on finance, the general process (we’re using our steps as an example) works as follows.

    How Does Our Boiler Finance Work?

    The process of applying for boiler finance works as follows:

    Selecting a Boiler

    Our easy-to-use interface provides our clients with a quick boiler survey. However, many competitors require you to browse their boiler selection and select your desired unit.

    If you know precisely what boiler you want, this is great. But for those who are unsure, we know that taking a quick survey can significantly help.

    Choosing Finance

    When you’re happy with your selection on the product’s page, you can choose to purchase the boiler in full or view your finance options.

    We provide a financial calculator that uses information shared by the financial provider. Beware that these online calculators are estimates and not final amounts. However, the variations on our website for the boiler will fluctuate between 2p a month.

    Make sure to read the fine print when using online calculation tools for finance.

    Once you’re happy with the monthly instalments and deposit requirements, you can proceed with the order (or go to checkout) and apply for finance.

    Applying for Finance

    If you are using our finance application process, you will need to visit the websites of our partners Novuna Personal Finance and Snap Finance.

    As a broker, we’re just the middleman, but the application process on their website is quick, informative, and, importantly, easy.

    Once you’ve completed the process and been approved, which should happen within minutes, you must either e-sign an agreement or print it out to sign.

    We trust our partners but we will always recommend that you read the fine print.

    When It’s Done

    Once you’ve agreed to the terms of the finance agreement with WarmZilla Ltd, we’ll notify you and start booking an appointment to replace your old boiler.

    When you agree to purchase from us, you also get the following with your new boiler:

    • Installation by a qualified Gas Safe Engineer
    • Removal of your old boiler and parts
    • A FREE system cleanse of your central heating system
    • Chemical inhibitor for added protection for your new boiler
    • A 10-year guarantee, which WarmZilla will register after installation
    • A FREE magnetic system filter for ongoing protection
    • And the Neomitis RF Digital Wireless Room Thermostat

    Now that we’ve explained how to buy a boiler on finance, why would you, besides the obvious situation where it stops working?

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    Why Buy a New Boiler on Finance?

    As stated, most will want to buy a new boiler on finance because they lack the capital to purchase a new unit outright.

    But this being said, sometimes homeowners want to be able to manage their budgets.

    Managing Your Budget

    One of the main reasons someone could be interested in buying a boiler on finance is to ensure they meet their monthly budgets.

    If you do pay for a boiler by dipping into your savings, you could end up ruining your monthly budget when you run into a few tight months.

    As an example, imagine your new boiler costs £2,400. Paying this amount upfront will strain your finances, and if some other emergency expense without a finance option does occur, it will be tricky to manage it.

    Get Better Products

    By financing your boiler purchase, you can buy a higher-quality boiler than you might be able if you were paying upfront.

    New boilers last 15 years or more, which means when buying a higher-end model, you’ll be able to use the better features for longer, enjoy the best energy efficiency ratings for years, and access longer warranties.

    A more energy-efficient boiler can also help you save money in the long run through reduced energy bills and fewer repair costs.

    As a real-life example, instead of settling for a mid-range boiler that costs £1,500, financing it will allow you to go for a top-of-the-line model priced at £3,000.

    Over time, the more expensive model’s superior energy efficiency could result in substantial savings on heating bills.

    Immediate Benefits

    As we know, boilers are crucial for maintaining a comfortable home environment, especially during the colder months.

    If your current boiler is unreliable or has broken down, you can’t afford to wait until you’ve saved enough to replace it. Financing the purchase of a new boiler allows you to replace your boiler immediately, ensuring your home remains warm and your hot water supply is uninterrupted.

    Also, replacing your older boiler will reduce energy bills going forward and ensure there’s no need to call in a repair man for several years.

    Unless it’s for the annual service.

    Fixed Monthly Payments

    Many financing plans offer fixed monthly payments, which will simplify budgeting. Knowing how much you’ll pay monthly can help you manage your finances more effectively and avoid unexpected shocks.

    Flexible Terms

    Financing options often offer flexible terms to suit your financial situation. But say you get a better job or come into some more money?

    Having access to a finance agreement with flexible terms can be helpful.

    For example, if you receive a bonus at work, you might pay extra for your boiler. This will shorten the term of your loan and reduce the interest paid over time.

    Building Credit

    Financing a boiler can also be an opportunity to build or improve your credit score. Making on-time payments shows your reliability to creditors. It can boost your credit rating.

    Building a better credit score will make obtaining other forms of credit, such as a mortgage or car loan, more manageable in the future.

    Peace of Mind

    Finally, financing your boiler often includes additional benefits such as extended warranties and maintenance plans. These can provide peace of mind, knowing that your boiler is covered in case of breakdowns or other issues.

    Ready to Buy a Boiler on Finance?

    Now that you know how to buy a boiler on finance, you can find the boiler you need via our excellent online survey.

    If you have any questions, you can ask one of our consultants.

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